A Bhattacharjee (Service) 21 March 2016

Applicablity of service tax on under construction property

Dear LCI Experts,

I have made the sale agreement with my builder in the month of April,2015 wherein service tax clause is mentioned.I have been making the part payments from my own sources of fund without service tax and didn't avail loan from bank nor did pay any stamp duty.

Now,suddenly my builder is asking for entire service tax amount including car parking citing hike in service tax % but when I checked with some friends they have said that service is not applicable against my flat due to following reasons:

1.It is an stand alone building consisting 9 flats not a part of housing complex consisting swimming pool,gym,club house etc.

2.My flats are of 470 Sq.ft. & 770 Sq.ft.It falls in the low-cost housing segment i.e.less than 600 sq.ft and property worth less than Rs. 20 lakh individiually.

3.No service tax is applicable on car parking/garage chages if mentioned separately in the agreement.

4.The buyer is liable to pay the builder Service Tax at the time of purchase of property, which the builder will in turn deposit with the Govt and if the Builder does not collect Service Tax separately, it would imply that the amount paid by the buyer is inclusive of Service Tax.

5.Since stamp duty not paid by me,so part payment made will be considered as token advance and if full payment is made after completion certificate is obtained,then I am not liable to pay service tax on behalf of the builder.

Kindly confirm on the above points so that I can take it up with my builder according or seek legal support.

Regards,

A Bhattacharjee.